that they'll just have to fail because if they go to the window and that's revealed, then the market will then, you know, believe that they are, in fact, not stable, and the whole purpose of the discount window loan will not be served. so that's particularly sensitive one for us even though that's a relatively small part of our lending. >> okay. thank you. >> senator warner. >> thank you, mr. chairman. appreciate getting my time. thank you, chairman bernanke, for being here. i do share one concern that senator vitter mentioned about the deficit. gosh, i wish we would have supported senator gregg's proposal when we had a chance, i think it was still the best, perhaps last-best proposal to actually force this congress to take an up or down vote on a plan that would put us back into fiscal sanity. i'm going to come back on the question of financial regulation. ..

>> one of the comments you made and we are now 18 months after the crisis and you've said you have looked at the fed within supervision of the bank holding companies stronger capital, stronger risk supervision. you know, we've had a lot of discussion over the last 18 months about size.

we've talked a bit earlier, senator raise questions about the volcker rule. i share some of your concerns about how you draw those lines. chairman dodd raise the question about using some of the intimate out there in terms of derivatives. can you tell us a little bit in his last 18 months with this increased focus on the largest sophisticated bank holding cubbies that you currently supervise, you know, what steps of the fed has taken to strengthen the supervision? any more specific way than you did. >> it would take me a long time. >> perhaps you can do that for the record. >> just very briefly there's been a lot of regulatory site. we're working with our colleagues in basel and elsewhere to substantially strengthen and modernize the capital requirements, the clarity of requirements, executive compensation requires, risk management requirements and a bunch of things to give a stronger machine. that's an important part. in terms of supervision we are restructuring our intern

organization, and we think a landmark event, a warship it was the stress tests last spring which were incredibly successful. which the federal reserve led. and i believe the federal reserve input to that was to supplement the standard banking examiner going in looking at the credit file with a lot of analytical systems to cope information which helped improve comfort really a cross banks which helped to determine the factors underlying possible risks to banks, which integrate the macro centers. and those sorts of things. we have in our internal structure we're first of all creating a new group which will bring together not just the banks supervisors but people from other disciplines, and i mention the economist, the payment system people, the financial people and so on, to manage the supervisor ever for the system as a whole.

they will be looking at a portfolio of firms. and so it won't be affirmed by from operation where this team looks at citigroup and this team looks at j.p. morgan. instead they will be looking collectively at groups of firms doing or so comparisons and taking a more systemic type approach. on top of that we will also have a quantitative evaluation team, which increases something we've already done which is currently for small banks, you don't go in every year or every six months. so what we tend to do is look at a bunch of data, a bunch of call report information. for example, use models to try to buy up with a there are problems and go back and look. extending that idea in a much more sophisticated way, we can give these quantitative folks the license to look at a range of activities in the firms and look at them across firms and try to use their offsite type analysis to supplement and

support the on site analysis. >> i want to be sensitive to my colleagues time and i want to just give one more, i've got a lot of other questions, but i will take a minute of my time. specifically in terms of i believe within safety and soundness. you look at proprietary trading, hedge fund activities and private equity, whether you have wrapped up on that. and what the issues that one of the panels raise with us earlier, which i thought was good was the whole question of interconnected as. and i will close with that. but i would love your comments on that. recognizing other folks have been waiting a long time. >> so we haven't tried to invoke, we have and try to in the volcker rule. but we have -- we have heighteneheightened, we have high dark activities. we find that is a big achilles' heel in the whole situation was that firms did not have sufficient understanding of the broad-based exposure across all

the business lines to certain kinds of risks and we've been working very hard on that. on that part. [inaudible] >> on interconnectedness, this is a place i think the federal reserve has the advantage. we have for seven working very hard on strengthening the operations of the credit default swap market, the. and in doing that we're looking at, it's a critical to us, j.p. morgan plays a critical role. dtc sea is lazy critical role in the security clinics market. we are integrating those with our analysis of the firms and that's actually important equipping and a lot of attention to that. >> senator gregg? >> senator demint? >> i think senator demint was here and left.

>> thank you, mr. chairman. thank you, mr. bernanke, for and during us here again. i really appreciate you for being here. i apologize for missing some of the questions but i did hear your testimony, and i just like to get a broad perspective. i know we're talking about a lot of the details of financial military systems, but just maybe a larger concern. as i look at what we're doing here in you can overall and a lot of the debate about specifics, it does seem that the underlying debate is more about are we going to have a free market economy or more of a centrally planned government directive economy. and they are very different views on monetary policy, depending on really what our paradigm is, i believe. in my concern is as i look at what we are, even versus five years ago, that the federal government owns two of our

largest auto company. our largest insurance company, our largest mortgage company. we are heavy and debate about expanding government control of healthcare. we pretty much control the energy sector, where we drill, all of those kinds of things that we are considering now a new financial reform package that would supersede state control, go all the way down to payday lenders and pawnshops. and in the process of moving in this direction, we have created huge debts unsustainable, and 10 year projections or more than trillion dollars a year, additional debt. my concern is that in your testimony, that you didn't mention any of this. not until we questioned the debt, what was a? a concern. i mean, i know it's a concern that i'm not suggesting it's not. but i would think that given the

fact that the uniqueness of the american economics system has a lot to do with more of the adam smith invisible hand bottom up that the chairman of our federal reserve would express some concern about the expansion of government ownership and controls of large sections of the private sector, economy, and knowing that at some point there is a tipping point at some point where we no longer function as a free market economy. i'm not sure if we've gone past that or not, but my concern and alarm is that you have not expressed any concern or alarm of the need for congress to look at ways to the best these thing to try to move things back in that direction. is that not a concern? or is your focus just not -- your focus is what you have to do with what you've got to work

with, and that's just not your area. >> senator, i have a lot of things to talk about so i can't cover everything of concern. let me talk about the financial sector and i think they are, that returning to a a market oriented financial sector is a top party. and we are in fact doing that. for example, all the big banks have now paid back their t.a.r.p. money and we are trying as quickly as we can to get those banks financed by private capital, which have raised a great deal of private capital. it's very important that aig of course is very problematic but they are selling off assets in order to pay us back, and they're making progress on that. our objective is to put them back in the private sector. we talk about fannie and freddie. and i do think that we have to get away from this neither fish nor fowl situation. i think one solution would be to privatize those firms and i think that's an interesting direction.

if i might, i think perhaps the most important thing as a number of people have discussed this committee is looking at too big to fail, look at resolution authorities and so on. if you were able to get a strong resolution authority, it would do more to bring back a level competitive playing field, market discipline into the financial sector, than anything else that you can do. because with a true resolution authority while creditors know they would lose money, shareholders know they will lose money if the firm fails, then they have the incentive after that to evaluate the firms credit quality and the risk-taking and so on. and that would again bring back competition, bring back market discipline. so i've been very much in favor of bringing back the market in all these areas, recognizing that financial sector does need appropriate regulation. but market forces and competition on two plays of schedule and i'm all in favor of doing that. we will work with you on that. >> i appreciate that, and i

suspect we have very much the same philosophies about economies. but i think the country and world needs to know that. and i just would appreciate, as you look at where you are, that there is a need to back away from where he our. and lots happen in a short period of time that has expanded the government scope and a lot of areas, and there is a big difference in central playing and concept as you know more than i do. than free market accountability. i think you're talking about and believing. i appreciate that and i thank the chairman for allowing me to ask a question that i healed back to expect senator to buy? >> thank you, mr. chairman. is good to see again. first to comment. i count myself as one who believes the fed should retain a robust role in the supervisory area. the reason for that is that any new entity would have to get up to speed. it would be a learning curve there that i think would be present some difficulties. secondly, my strong impression

is that you and your team have learned from the recent past about what can go wrong and that can inform her decision-making going forward. and third, my impression is that you gain some important insights by the oversight at the microlevel informing your judgment about setting monetary policy and setting macro decisions. that's kind of my take on how we got to do this going forward. just a couple of question. first, as you mentioned, the last quarter gdp figures were pretty good, but a big chunk of that was inventory, rebuilding and that sort of thing. so we are all worried about the sustainability of the recovery. the risk of a double dip, that sort of thing. you mentioned the key to this to have it become self-sustaining as final private demand. i don't want you to wait until the political thicket, but there's a debate in congress about what measures we might take to augment final private demand that you have any sense about what steps would be prudent to take at this time to

put some money back in the recovery and it sure that it is sustainable? >> well, as you know i don't like to inject myself in debates on fiscal policy. >> as an economist. >> i don't think i can separate my role that easily. my sense is, let me just as an observer it seems that congress is debating a number of potential fiscal actions but none of them are i think no one is proposing anything at the scale we saw last year as far as i know. >> senate voted the other day on a 15 billion-dollar package. i voted for you. this and good things into. some of my colleagues disagree. took a different approach. just in terms of scale, most people to even myself, some good things i voted for but that's unlikely to be of the magnitude that will be material to add to the final private demand, to use your which. do you have any sense about the scale that needs to be to have a material impact on final private demand? >> well, if the smaller programs

are well-designed they can be very beneficial and so we don't want to denigrate that at all. >> i did major and i was asking the company get a sense of what can we do to try to enter the economy gets to the lakes that it needs. >> you know, it's going to sound like a dodge, but i think that if you're going to do more fiscal policy in a new term, you would be very constructive to combine that with more tension to the exit strategy five years down the line. because i think there is a risk that financial markets may begin to become concerned about the sustainability of u.s. fiscal policy, and the more you can assure them of ultimate, you know, -- >> it's not a logically leads to my second question. you were asked by senator dodd about the use of derivatives and the problems they're having increase. senator vitter touch on the deficit. i'd like to raise the question of greece again. at what level in our jet to gdp ratio is not going to be going up, some of that is unavoidable

because the recession that but you're asking us to focus on the intermediate term which i think is right. and that is what i was a strong supporter of the great-conrad commission. and other steps. do you have a sense of what, at what ratio of debt to gdp do we begin to approach the tipping point? and women into a risk of currency problems, interest rates, the kinds of things that greece is now expected? do you have any judgment about that? >> it's of course very hard to know, and we're very different from greece in terms of the type of our economy, the size of our economy, the fact that we have our own currency and all those sorts of issues. so just to give you one number. the book about financial crisis, it's been discussed in many quarters, mention 90% debt-to-gdp ratio as a level at which growth becomes impacted after that. now saying that, we've got, a

variety of experience in industrialized countries ranging up to very high levels in japan and in other countries, but our historical levels, we were down to the '30s in terms of debt to gdp. and i think heading towards 100% debt-to-gdp ratio would be very undesirable, particularly given the aging of our society and those obligations we're facing longer-term. >> we're asked me to get up to close to what, 65, 70% here in the next five or 10 years? last question. my time is about to expire and we also finance our debt. japan is mostly internal. we have a lot of extra. are you at all concerned about japan's recent steps to constrain demand there? what impact might, there economy is growing robustly. does that present mister the global economy the fact that they are moving in that direction? >> do you mean china? >> yes, i did mean china. >> no, i'm not not concerned about a. i they have to make appropriate

decisions about not overheating their economy. their growing very quickly, you know, from our perspective we would like to see more flexibility in their exchange rate has been part of the process for reducing overheating risks. but i think it is important that they achieve an appropriate balance between very rapid growth and the risk of overheating. the risks that their extensive credit extension becomes troubled, so no, i'm not particular concerned about that right now. >> thank you for your service, mr. chairman. >> senator gregg? >> thank you, mr. chairman. and i want to associate myself with senator biden, drilled into your record for authority and the range and the regulatory authority that should retain. i do think it's important that you are a major player in the atmosphere. and i do believe that although there are obviously airs that occurred across the regular machines, that you're so no more grievous than anybody else's. and in fact, i think in many

ways more, less egregious. to get into this issue, however, which senator bayh sso, senator vitter has touched on, which is what is the tipping point. you basically allude to the fact that maybe sooner than later if the markets lose confidence in this. the international market especially. and we have had a budget presented to us which puts us on a path as you described of it up unsustainability because deficits well run at five to 7%. that will triple. and the public debt, the gdp will hit 80 percent by 2015, 2016. and we hit 60% this year actually. so the question becomes what do we need as a government to deal to give the market's confidence that taking some action, real action in trying to control the out year event?

not the media issue of getting out of this recession, but the fact that any out years, we have an unsustainable situation which could lead to significant financial issue for us as a nation. and the reduction in our lifestyle and the quality of life in the standard of living of our children. >> well, your question was about the debt gdp ration which was the tipping point. another way to look at this is what does the trajectory look at. the trajectory is such that you have an unstable dynamic where interest rates, payments get larger and larger that in turn lead to higher interest payments and it explodes a city. that's the situation where markets will become very concerned. so i think this is much typical question as economic question. the question is, you know, can the congress, and recognizing these are very, very hard problems that i don't want to anyway to doubt that the

difficulty that it is for congress to address these hard problems. but it would be helpful if there was persuasive evidence that congress had the political will to achieve over a number of years a stabilization of the debt-gdp ratio or the fiscal trajectory. that could be done either through whatever mechanism you choose to undertake or maybe through specific plans or maybe even actions you can take now that would affect expenditures and deficits in the out years. >> but something should be done to. >> it would be very -- again, the point i would like to make is there really is -- it's not just a question of paying today for benefit tomorrow. there is benefit today if in fact you can increase the confidence of the markets that we will in fact address this issue. it gives you more scope and probably lower interest rates today are arguably the markets won't have the confidence and less to present event that gives them the the confidence which was a congress has to address

the gap between spending and revenues with the fact that back at his primary driven by spinning in my view. that is a rhetorical question. so, where are we in the perception of the world relative to this country? does the world have confidence that we can get our house back in order, in your opinion? >> well, the markets seem to have confidence. we can sell 20 and 30 year debt the relatively low interest rates, and i think that's a vote of endorsement for the long-term ability of this country to respond to these challenges. but we have to, we have to make good that trust. we have to follow through. >> and if we look at the issue of how you get the money out of the market, you put 2 billion,

trillion dollars basically into the economy, is that about right? >> the federal reserve? our balance sheet is to .3 trillion. it was 900 billion before we started. so we have expanded our balance sheet by but 1.4 trillion. specs are you to get that money back at some point, right? >> that's right. >> and i notice you listed a few things here that you have as mechanism. there is one that i wasn't that familiar. you said federal reserve is currently refining plans for a term deposit facility that can of reserves balances in deposit that are less liquid that does that mean you will require bigger reserves? >> know it means that instead of having reserves held at the federal reserve, only on an overnight basis we're going to offer a slight heart of interest rates to banks, reserves with us for an extended period and that

would take those reserves out of the overnight money market and give us more control of the federal funds rate. >> so you're not raising the reserve. you're just going to encourage people to put more money because you'll pay them interest on it, that's part of her new authorities to? that's part of the authority that congress gives to pay interest on reserves. >> thank you. >> senator bennett? >> thank you, mr. chairman. i wanted to go with a different direction, but just because of the last part of this was so useful, i want to say we just heard the fed chairman talk about the political will and congress to be able to address this issue. and it's breathtaking to me as somebody new here that two weeks ago we had the chance, because of senator greg's leadership and senator conrad leadership, to vote for a bipartisan commission. that's all it was. to take a look over a period of time and give us recommendations for an up or down vote.

we can have the political will give in to support that. so i want to thank senator gregg for his leadership and i hope we will try again because we need to demonstrate the political will that you're talking about. and we are not going to leave our kids a completely diminished set of opportunities to but i will come back to that. i want to ask you a question a little bit along the lines of senator brown was talking but different. in colorado, if you look at the last part of economic growth in the country before we went into this terrible recession, that period of economic growth resulted in an $800 decrease in the family income in our state. so the economy grew a middle-class family income fell as it did across the country. for our middle-class families, i would argue we've got two recessions that we're trying to recover from. this one and the last bit of economic growth that didn't derive their income. and at the same time in our

state because of health insurance over that period went up like 97% because of higher went up by 50%. so you have an economy that is driving costs of things that are important to move families ahead, but income is going down. and my understanding is it's the first of our economy has grown in our history in median family income went down. and i just when you give some thought about that because it just feels to me like there some structural things going on in our economy that we need, we need to be worried about. we need to concern ourselves with. >> you are correct that median family income hasn't kept up with average gdp or productivity. and there are a couple of -- >> let me just say because you made the point earlier as well. and at the same time, because it increases in productivity, you were talking about it's not

apparent where the jobs are going to come from to be able to help ameliorate the issues that i was just talking about. i will stop there. sorry. >> so just in terms of the median income, you mentioned one factor which is the higher cost of benefits and medical care, those things which have lowered wage growth as opposed to total compensation growth. but more importantly is the increase in quality. you can have a growing economy but if there is more going to the top, then the median guy could still be coming down. and that's an issue. i've given some speeches on this and try to address this to some extent that it is a very fixed issue. gawande i think everybody agrees about is that income and quality is to some extent tied to educational skills and equality. we live in a society where technologies advancing. what american people to other countries that have very large pools of unskilled labor, and

therefore, you know, as senator brown was saying, you know, union jobs in manufacturing are no longer a normal, predominant form of employment. so for all those reasons, in order to get more people to enjoy the benefits of productivity and higher economic growth, the 20 skills, education is a group part of the people of the events of the united states in general is that we do have a very flexible system. you know a lot about education. but besides k-12 we have community colleges, junior colleges, on the job training and all kinds of other ways for people to have skills. one of the things i would just say to this committee is you think about our unemployment problem, one of the lasting scars of this recession is very likely to be a generation of people who have been unemployed

for a year or two years and will find it difficult to come back and get a decent job because their loss of skills, because they will have to explain why they're out of work for two years. so that retraining, those aspects are very important. >> i think i'm ari out of time, but let me just observe that i agree on the importance of education. and it's one of the sad facts of the legacy of the last decade that in addition to the economic issues we're just talking about, we start the decade, as i understand, roughly first in college degrees in 10 years when we're roughly 15th in the world. so i wouldn't say that our track record over the last 10 years have been particularly good either. and it's just a reminder of the urgency that we face. this is working itself out in the daily lives of americans, that i think there is a enormous anxiety that we are at risk of being the first generation of

americans to leave less opportunity to our kids and grandkids. and because the deficit, the debt issue we're talking earlier and these fundamental economic issues. i appreciate your being here today. aske. .

to be spent by virtue of commitments that have been made. i once had a very wealthy man say to me explain to me why the federal government sends me a check every month for i forgot the number two and $50 or whatever it is, he says i don't need it and i said but you are entitled to it. and by law we are going to give it to you whether we've got a darn hot. and let's make it very clear that when we are talking about spending we're talking about fiscal policy, these are terms we hide behind when we talk to our constituents and give speeches about congress has got to get tough on spending. the real fact is that we bad to have the courage to attack the most popular programs in american history. we've got to level with our constituents and to tell them, we are talking about the programs you value the most and

do insist are off-limits and of the entitlements are off-limits were any kind of discussion here on fiscal policy we're going to hit 100% of gdp within 24 months. unless we have the courage to deal with it 65 -- 70 percent of the budget now, we're on autopilot to see 75% of the budget within 10 years, and the other 25 percent includes defense. so if you take dance at of the remaining 25%, you've got about 10 percent of the budget you have to get tough on. in order to solve this problem. i finished my soap box, but i think anybody is paying attention to these hearings ought to hear that and understand that because that's the reality. well let me get to the question relating to the debt to. we have our experiences, you and i and all the rest of us a little over a year ago with

respect to t.a.r.p.. one of the things you said to us at the time and a bank on as we voted for t.a.r.p. was that this was not a bailout, this was money that would come back to the treasury. it would come back to the oral reserve wherever it came from. and in french were right. the money is coming back. it has come back. a lot of the major players of t.a.r.p. have paid it back now, the treasury is recycling that money. senator gregg and i have been very firm about we were in the room when the conversation was made as to what would happen to that money when it came, and we thought that we rode into the law the requirement that when it. >> it would be used to pay down the national debt but we've been informed by the treasury lawyers that that's not what we did. in and i would like your reaction, my opinion is t.a.r.p. solvents problems, t.a.r.p. did,

indeed, avoid a worldwide depression. it ruled by collapse and not, maybe a bar in a row by depression but t.a.r.p. did, indeed, avoid air worldwide collapse in that very difficult weekend in september when you came here and said i'd run out of tools, very chilling kind of comment. while my colleagues and i felt like it was a james bond movie listened to the chairman of the federal reserve segui run at the tools. i think t.a.r.p. worked, my position and that like your reaction is that having worked it's now time to end it. so that the treasury does not recycle its and when the money does come back from those people who benefited from t.a.r.p. to pay down the national debt and i'd like your reaction to that. >> well, let me first say on the first part of your comments this is what i think it's difficult to address these deficit problems because there are popular programs. i agree with you that the t.a.r.p. and popular as it is achieved is basic objective of

stabilizing the banking system. it did not give as much as we would like to create more credits, it's an hour coming back. the financial firms i would put aside the audio and the mortgages -- >> os talk about that and in showrooms including aig putting together look separate a good chance of breaking even which would be remarkable in the long run remarkable achievement. he put me in a difficult position. i don't know how to adjudicate the legal debate. i think basically -- >> forget the law, giving your opinion whether or not you think t.a.r.p. can be terminated. >> i don't think -- i think the treasury was right not to terminate it unconditionally at this point because there's still some risk out there that we may have further provincial problems. i think it is small but to have some flexibility in case some new prices were to rise i think of is for a short time is not unreasonable. i'm afraid i'm fine two have to defer to congress on whether or

not you think those other problems -- programs proposed for small business lending and those things are within the programs and themselves. when i don't know how to and will be on that one. >> well, this member of congress are not. thank you mr. chairman. >> senator berkeley and. >> and gary match mr. chairman and thank you chairman bernanke three testimony. i wanted to know that when senator bitter asked the question on whether there's a need to limit the then why use of the federal reserve bank emergency lending power to support individual firms are wanted to know that in it chairman dodds contract that action and that is emergency lending to individual farmers is prohibited. and so a point i was asked to put forward and clarify. i wanted to turn to the issue

every capitalizing our community banks. this is something i hear about back, all the time, the challenge of these banks to be able to put up new loans, given their leverage and limitations of their capital challenges. i supported an effort to to recapitalize community banks and the administration has now put forward a similar plan. i was wondering if you could get inside on your perceptions on how the role of community banks and supporting lending to small business might be a factor in recovery of our economy. >> well, i think it's very important and that i guess on the subject to regulation i would like to remind the committee that the federal reserve of the way been focused on large institutions over the last couple years because of the prices, that we also learned would supervise large number of community banks as a member banks and they provide us very important information about the economy. we can learn what's happening at the grass-roots level, what's happening to lending, ended --

to get your question and that kind of information is a very valuable and we try to understand what's going on in the economy. in -- as you point out, the community banks have in many cases when they are able as strong enough have been able to step up and provide lending. they are important lenders to small businesses, for example. one and as you say and this was the issue that senator bennett was raising and one of the proposals the treasury has made is to create a fund that would would capitalize small businesses and small banks, that demonstrate they can increase their lending to small businesses. so in that previous conversation, senator, i'm not going to endorse or not endorse that approach. there are other approaches were dressings of businesses but i would say that if you go do that that one suggestion the treasury

may switches to separated from the t.a.r.p. and maybe pass separately would do so that it is not stigmatize or otherwise associated with restrictions with the t.a.r.p. would increase the chances successful program. but we certainly do value the small banks and what they are able to do. if we're to get this economy going and get employment growing again and then small banks and businesses -- >> thank you very much. i want to turn to another issue which is that i was meeting with a group of members of parliament from canada to nights ago and when i asked them about the economic meltdown and the impact on canada, they smiled and said recap and the risk out of our banking system and now there is a huge economic movement in which we are going down, canadians are going out and

buying up foreclosed real estate in the united states. and certainly when it in your role there is the chance to look at it and learn how different models interactive around the world who in which you take a second to comment on that canada structure, how they manage risk, whether there's insights for us here at our efforts to provide in regulatory reform? >> i will start with one point riches their monetary policy was similar to that of the u.s. commander during outcomes. so those to blame the monetary policy should dress that and the differences between canada and the u.s. had to do with their infrastructure and ever to primary and manages they had. first they simply have a much more conservative bank. supervisory structure in terms of what they allow them to do and that capital the banks have. in the go-go days and they would be considered a state with an

eye exciting but that turned out to be the right way to go in there -- the other thing they did was they avoided -- low down payments and bad underwriting and all the problems that came to buy this and the crisis. so they took a conservative approach one and it paid off for them although given that they are the biggest trading partner of the u.s. we had a significant recession, of course. >> well, if i can follow-up on your point about the underwriting standards. some have argued that the reason that canada proceeded in to maintain a solid underwriting standards was that they had an independent consumer pressure

protection agency and that vision of defending consumers from tricks and traps in london was never severed in if you will to other goals be they safety and soundness, monetary policy and so forth any insights on the role that institution played in canada? >> i done of the tax on that but i would agree it's very important to have strong consumer protection laws. >> i think i'm over my time so i will stop at the gary match. >> senator shelby second round of. >> and thank you mr. chairman. chairman bernanke, the chinese have made a number of comments about their massive u.s. treasury holdings. last year they publicly worried about whether they investments were safe. recently they have expressed the belief that they should respond with some of the obama administration decisions by selling billions of treasury

holdings. while china does not have a financial interest in rapidly -- i don't they believe in dumping the u.s. dollar assets, may have other competing political interests. do you believe that there is a risk to stability of the initial system associated with risk to the value of the dollar perhaps stemming are coming from international nations -- relations between the china and u.s. and second lady you believe that china's large dollar reserve holdings pose a threat to the stability of the global financial system given the leverage those holdings provide to china to enable it to pursue a policy of paying its currency at an artificially low value perhaps i know that's a novel but i think these are important questions. >> let me try to redress that. first is the factual question i don't think there's been any significant change in china's

holding of dollar reserves. >> they have continued to acquire reserves. they have done that when the dollar was falling and on the dollar was rising. >> you think that is good or bad or are you in different? >> i think rises from a couple of problems. one problem is their foreign-exchange policy, the currency picked in order to do that they have no alternative but to buy treasurys. the other is the other reason is the global imbalances were running this to the learning exchange. which is that they run a very large current account surplus where we run a current account avocets and it's one of the objectives discussed by the teetwenty leaders in their recent financial sense that we should all work to try to get a more balanced trade and capital flow situation so i think it would be a healthier situation in china save less and we saved

more and as a result they were not accumulating dollar assets so quickly and we had a more balanced financial picture. i do think that those large capital flows and the potential instability of those woes is a risk to our religious system and i think we need to try to get those imbalances rectified in. >> and was picking up what's been mentioned a couple times by senator mitchell and others about the tse's, at this plant and has been said there's no indication that any one reform will take place in then near-term and justice in a secretary diner indicated and i think to diluted that the administration is likely to provide a plan for reforming these institutions prior 22011 at the earliest and i know it's difficult and costly, but while

implementing reform will take time, could you describe to the committee hear some of the risk that we face should we not start the process of reform as soon as possible? and never as we kick the can down the road, we could cause difficult problems, could we not? >> yes, sir. first of all, i thank you and i have a lot in common particular on this issue. we were together on it and the federal reserve has had concerns and you were a supporter of very good strong regulatory oversight of any and friday. unfortunately we know how that turned out and they didn't have enough capital. what i think the current situation is worrisome. it obviously is a costly situation and it all so much generates a certain amount of uncertainty in markets as people tried to anticipate what the u.s. housing and when rancho of

situation's going to be in the future. in this house and policy is a big part of our of financial policy in this country and the lack of clarity about that is an issue. now, again let me just say i sympathize with secretary geithner in there's an awful lot going on in financial reform which is complex but i do hope but we think about where we want to take fannie and freddie, so that we can provide some clarity to the markets and the public about where we think this ought to be. >> thank you mr. chairman. >> senator melendez. >> thank you mr. chairman. chairman bernanke, well, and congratulations on your confirmation. in bois pleased to support chip. let me ask over the next few years there's going to be more than a trillion dollars in short-term commercial real-estate loans that will reach maturity. in the ongoing and credit crunch

will make it very difficult for owners of bible commercial of real-estate to secure long-term financing. you know, in 2007 at this committee hearing with others i said we were going to have a tsunami of foreclosures and housing market and i was told that was an exaggeration. i wish i had been wrong. and i see this as the next gloomy and prices. you know how it seems that the bill federal government fails to act on the warning signs about the hunt for pleasure prices and i'm concerned that we're not acting on an increasingly clear warning sign about this commercial mortgage market. with so i am wondering first do you believe that this is a very serious issue facing us down the road? and my this emerged as our next economic crisis? and regardless of how you might characterize it which i will wait to hear what you have to

say, what do you think that we can do? for example, i've been told that this is one in which community banks will face a clear challenge across the spectrum. the is, for example, of allowing those banks to amateur eyes losses over 10 years and options of that they don't completely drive up lending and at the same time maybe have a lot of institutions close as a result? i'm looking to get ahead of the curve but that purvis, maine. that tidal wave is coming release soon so i like to hear your views on that. >> senator, i share your concerns about this. this is yet another place where the federal reserve oversight of smaller and regional banks has been implemented for us and we vow of the situation closely to look at implications for broader economy and the financial system. it seems likely that small and regional banks will be facing a and a lot of challenges from losses on commercial real

estate. the bank regulators are watching this carefully because it's going to be pressuring banks and. chairman barron i think put out a list of problem banks which has been obviously increase and one of the key reasons for that is the commercial real estate issues that a lot of small banks are facing has implications putting pressure on the banks but of the small bank has lost capital because of its losses in commercial real estate that it doesn't have the ones to make loans to small businesses, for example so it can permeate and attacked the broader economy as well. just a few comments. as i said we are alert to this of our concern. we in the other bank regulators have tried to address it. we have put out commercial real-estate guidance to the banks. which intends to address the question you raised about how to deal with debts that are coming

due. that guidance is main purpose one of the main purposes for so long to avoid unnecessary write-downs so one of the guidance is we give it is that the commercial real-estate project that is able to make the payments but whose collateral value has declined should not necessarily be written down for that purpose, for example. our guidance also helps give specific examples and helps banks see how they can restructure loans just like restructuring residential mortgages in ways that will keep the loan current without having a major write-down for the bank. so we've been doing that as bank regulators and trying to find solutions. i also want to mention that the talf which is still open for commercial mortgage-backed securities we have had it been a success in bringing down commercial mortgage-backed security spreads. in starting up some activity outside of the lead the, in

creating new cmda securities. so we are buried focus on those issues and leave address a number of different ways. i think i want to end white with a little bit of -- i wouldn't say good news, but lately the evidence on commercial real estate is that there seems to be some improvement in some places at the london metals are better than we have. in some cases as the economy has done better. as we said we've seen more progress in this emt yes market and banks' ability to restructure loans so i don't disagree with your initial characterization because this is a serious problem that we have to monitor but i would put forth just a sliver of optimism recently in terms of some improvements in the outlook for that category. >> let me briefly follow web mr. chairman. i appreciate your answer. and i appreciate the guidance of that regulatorsen somewhat helpful. if i am just concerned and have

happened here there's a sliver of a silver lining here about some improvements in certain sectors, but my sense is that that is not going to meet the challenge before us. one and i hope that we are thinking perspective glean about what else we need to do worry be able to do because it seems to me that if the worst-case scenario happens and i have to be honest with you, i've heard from a wide sector of community banks and i ever heard from a wide sector of those who are in the commercial real-estate market would tell me that there isn't a market out there. for the renewal of these mortgages. and and as such, it could be a body blow to this economy at a time when we are seeing a recovery takes place.

and that would meet you shoot -- that would be hugely unfortunate as well as consequential in a very real way to our overall economy. so i would love to continue to engage with you. i'm figuring how we are going to continue of the levels not just the federal reserve but also thompson to the treasury about this, we need to figure out how the best with its allies because it's a challenge that's coming and while those who are maybe responsible beyond a certain degree will have to face the possibility of closure. the breadth and scope of this is something that i'm afraid of the consequences of what it means to our overall economy. >> thank you, we are focused and we would like to work with you on an. >> thank you. >> senator bennett. >> thank you mr. chairman. the one thing that i hear most often and i think my colleagues here most often as they talk about where we are right now

constant complaints that banks are lending. and when i talk to the banks they say, well, we are better than we were. year over year we are better in 2010 than in 2009. so the volume has gone up and we are doing our best, but we can't find private worthy borrowers. we are ready to loan but we can't find a creditworthy borrowers. and then i drill down a little more i find it the real challenge comes from regulators. who come in with a definition of creditworthy borrowers and say to the bank, okay, he used to make motto loans at this number on your credit reports and now it isn't this higher number you can make the auto loan. and i have had a business people with whom i've been involved personally. now divested myself and they say we go to our bank with whom

we've had a 30 year relationship say we want to make this acquisition and can we get a loan to fund it, and instead of saying yes since the bank has always said before we would like your business plan and like your track record, your solid people and know what you're doing, they say will give you this loan if you can demonstrate that you can pay out of your current cash stream. well, and i could pay at my current cash stream i wouldn't be coming for the law to try to make acquisitions of additional jobs for additional productivity that would come from what we would normally think of as a very ordinary kind of transactions is simply not there. and inevitably it always comes back to the regulators won't let us do this. the regulators have tightened their requirements of what is considered creditworthy. you are the primary regulator. you see this i am sure every day or at least your staff does.

out like your reaction to that because that's when i hear after the rhetoric is all over the screen is all over and a political way, that's when i hear from business people, the banks are not supporting true to entrepreneurial activity in this country and until they do we want to -- we won't get economic recovery going and they're saying it primarily because of tightened standards on the part of the regulators. >> that's a difficult problem and what we are focused on as well. first of all, there's a tradeoff. probably in but it turns too easy before the prices they tighten up saw and, lately banks and to have leveled out and not tighten further at least. but there's a trade-off between making sure that you're making good loans making sure credit worthy borrowers and not to nine. our focus at the federal reserve has been to achieve a proper balance and we want to make sure

that creditworthy borrowers who are creditworthy can obtain credit and we have been aggressive and try to do that. we started with the kennedys guidances' but these are instructions to our examiners and the banks. which say, first of all, that we strongly encourage banks to make credit worthy loans because it's good for the banks and borrowers and the economy, we train our examiners to take an approach. we most recently put out with yet another guidance on small business. which actually says you should not deny credit based on what business you're in. restaurant or whenever a geographic location you are in. again this is an issue of collateral value that's decline and shouldn't be a reason not to make the law and we're encouraging so-called a second look committees to look again at loans turned down just to make sure that there's not a way to make that loan. so our guidance and regulatory philosophy and train examiners has been focused on getting that

purpose bonds. i've said this and previous testimony and people say i'm not convinced what's your evidence so since then we have been trying to do outreach and get information directly back from banks, small businesses and have our example put questions in that survey of small businesses to get information about their present experience. we are gathering and requiring based to require more information on small business laws. we have a series of meetings and programs at reserve banks that bring together small banks, small businesses and community development organizations and we're doing our best to find out what's really happening because in some cases i think you'd agree the regulators have escaped -- have been a scapegoat. >> i understand that. >> credit for the problem. but the utter reserve because we have interest, of course, in safety and soundness but we also have interests in the house of the economy.

that inside that began in the balance is very important and we and i realize it doesn't feel too down to every bank in a situation that we're making enormous efforts to get that balance. when you do talk to your business acquaintances, first asked with the regulator is causing the problem. ..

so his game and personality were -- wilson, his game and personality were electric, a future star in the nba until one morning when everything changed. get an inside glimpse at the man the nfl mayors have chosen to lead them in -- players have chosen to lead them in the fighnewtive rgaient. 'll uce emar ith. >> t our stin >> and a truy th abou inws tvie' hello and welcome to this edition of net impact. we've seen nfl commissioner roger goodell and nfl players

association executive director demaris smith exchanging pleasantries through the media and have even been in front of congress as the two sides attempt a collective bargaining agreement and as they do so the atmosphere will get more tense. we know goodell he's within on the job three years now but who is this man that the players have chosen to be their voice in this turbulent time? here's comcast sportsnet's mid- atlantic's jill sorenson. >> for our last practice we could play head coach. >> yea! >> we do head coach. >> reporter: this is fun for demaris smith the executive director of the nfl players association by day and a coach for his 10-year-old son allen and his baseball team in silver vince, maryland, by night. >> tag -- in silver springs, maryland, by night. >> tag him! >> reporter: the intensity and

passion you see here is smith's day job as union smith named the successor to the late and edge legendary gene upshaw in march, the man everyone calls dean has not slowed down. >> i've been on the job six months. i've probably been on the road three and a half, four months solid. >> reporter: he was seen as an outsider to get the job with former players as the front runners. his background as a trial lawyer was far from the experience of an nfl player. >> i definitely think that's a positive that he was an outsider, you know, guy coming in, he doesn't have all the connections or, you know, any preconceived notions of what was happening before and, you know, can he come in and kind of look at things clearly. >> i'm very confident. i'm confident, that you know, he can get things done, whatever that may be. he's presented himself in such a way and i think he's broken it down to the players in such a way that we can understand it. >> reporter: as much as he's an outsider d. is a d.c. insider having grown up a stone's throw

from fedex field. >> you come out of the room in d.c. and get smacked and then you're injected with burgundy and gold. >> reporter: on his resume counsel to then deputy attorney general eric holder and he also served on president obama's transition team. >> business worldwide in some way, shape or form always touches washington. it's one heck of a sports town. so yeah, those are things that are inextricably tied to who i am. does it affect what i do? probably. but hopefully affects it for the better. >> reporter: with the possible lockout on the horizon demorris smith has made it a priority to visit each team to help them understand the process. >> this was in one of the file drawers in our office and it slowly but surely i'm going through every drawer, every cabinet. >> reporter: why? >> a great deal of our history on what we have done internally to be a stronger union is there. the one thing i'm blessed about is gene was an incredible note

taker. here on the back he'd clearly written out in longhand a speech that i don't know whether he gave or was going to give, but the most interesting part at the bottom is you see it in quotes, the nfl has always been willing to take a short loss for a long term gain. >> reporter: in the midst of negotiations or perhaps because of them d. and the union have made national headlines on a regular basis. >> as executive director, my no. 1 priority is to protect those who play and have played this game. to me it is probably a little bit of a combination of half negotiation, half trial lawyer. i mean both of those things are things that are in my dna for some way, shape or form. i think about my grandfather in the pulpit. there's probably a little bit of that, too. as a result, i'm really not afraid of my question. i want guys to be actively involved. truth be told, i probably lean on them in a very hard way, but

this is their union. it's not my union. it's their union. >> reporter: always in the line of fire demorris smith is used to the heat. >> i thought that was a -- 17-year-old ben benji wilson was a rising star, a young basketball phenom with a definite nba future. in fact, in 1984 wilson was the no. 1 ranked high school basketball player in the nation. he'd been described as a magic johnson with a jump shot and kevin garnett with a better handle of the ball and a better perimeter game. luke stuckmeyer of comcast sportsnet chicago shows us wilson's wizardry on the court. >> reporter: chicago may be a football town and baseball crazy in summertime, but at its core in the city basketball is a way of life. we're not just talking about

the m.j. glory days. we're talking about the kids who built their games here like isiah thomas on the west side and more recently dwayne wade and derrick rose on the south side, but 25 years ago somebody else owned these courts in chicago, a skinny silky kid with a smile named benji. >> and center for the wolverines a junior, 6' 7, no. 25 ben wilson. >> if you haven't seen him, you're in for a treat, 20 a game. >> i would go and i want to be successful and i do what it takes to be successful and that is when i go home i study and do my work and go to class. >> kind of corny stuff. >> well, it works. >> reporter: everything seemed to work for benjamin wilson, but especially basketball. >> wilson two. >> reporter: born and raised on the city's south side, he was the middle of five brothers and it wasn't long before that orange rock was the fiber of

his life. >> looked like bruce lee with two basketballs. he approached the basketball hoops. just unbelievable what he could do with that ball three fingers pawning the ball like this. >> reporter: and with ben and his ball around the wilson's neighbors were always up early. >> the neighbors used to be furious about being woke up in the morning because he was always dribbling the basketball and one of the next-door neighbors mr. robertson said benji was the alarm clock to get him up and go to work in the morning. >> reporter: by 16 wilson could still play like a point guard but now he soared like an eagle with his new 7' 3 wingspan. >> bankston drops it down to wilson for a turnaround. >> we used to imitate ben when he shoots his jump shot. it was like he'll shoot it and then put his wrist back like this and run down the court but

everybody used to emulate him in high school. that's how big he was in high school. >> reporter: and everybody wanted to be around him. benji's game and personality drew in friends and admirers from all over including the nba. >> ben wilson steps in, scores. >> 6' 8, 8 1/2, can do it all. i mean when i say do it all and do it gracefully. i mean with the greatest of ease. i mean and it looks so pretty when he was doing it. i mean it was smooth. it was silky. it was just you had to -- he had that camera that captured that moment. i mean he was that type of player. >> wilson slide down the lane. >> reporter: as a junior he was a starter on a lineup full of

seniors. benji was third team all state and the wolverines went 30-1 for the 2a state title. that put simeon on the map. >> i think he helped push simeon into a more global nationwide type school, basketball power. i remember our senior year, you know, we thought we were world beaters, we could go anywhere and play anybody any time. >> reporter: after winning the state championship in the spring of 1984 ben kept improving stunning scouts at the nike all american camp. he left as the first kid from illinois to ever be ranked as a no. 1 player in the entire country. >> he was clearly, clearly benjamin wilson was the no. 1 player in the country. no one came close. >> reporter: ahead how benji

wilson's life changed in less than a second. >> ben's thumb was rising and then at midday. >> reporter: a horrific crime on these streets in chicago is remembered 25 years later. benji wilson's future seemed secure. just a few years in college before fame and wealth would schuler follow in the nba -- would surely follow in the nba,

but it wasn't meant to be. instead there was a tragic turn of events and now 25 years later benji wilson has never been forgotten. let's get back to his story. >> reporter: ben wilson had it all, sizzling basketball skills and an electric personality, but on november 20th, 1984, it was a gray cold fall day a on the like this one and on vinsenz avenue right in front of simeon high school the day was about to get even darker. >> the old guys, they've served their times and lived their lives, when the sun is eclipsed or the sun is rising it's so different. ben's sun was rising moving towards midday and then it became midnight at midday. >> reporter: at 12:37 on november 20th ben wilson was walking with his girl friend

and mother of his 10-week-old son brandon. they were a block from the school. he liked to gather at a small store around lunchtime but benji bumped into two freshmen from calumet high school on the sidewalk. they pulled out a .22 caliber handgun and shot him twice, one bullet piercing his aorta and the other tearing a hole in his liver. >> to this day i still don't know the story. i've never tried to seek out the story because the only person that could tell is and while the chaos continued at simeon benji's brothers were miles away with a sibling connection that still haunts them. >> i was in library class and i

heard somebody say i got shot. i got shot. i was in library class and i was like i'm going crazy, but then i thought about cain and abel when cain slew his brother and the most high said where's your brother? i heard his blood cry from the earth. right there something let me know that he got shot. >> and as a matter of fact, i had a dream two nights in a row before he died, somebody or something tried to tell me, had a dream that night benji was dead. next day i had a dream benji was dead. at that moment i heard my brother's voice say i got shoot just like i said to you there, came to me like. so this was something there and i was like what the hell's going on here?

my mama always say you want the most high to talk to you, you got to be in a quiet place and i was in the library class at the time my brother was shot and i heard him. when i found out, i went be serk. >> reporter: he waited fo ery as a

we seen ben on the floor by himself. that's what brothers do. >> they weren't supposed to. i don't like to talk about that but they had to see him. >> they was telling us that he's in stable condition and kenny allen pulled the sheet back and we saw him. we had to see him and we knew he was gone. >> reporter: early the next morning the day his senior season was supposed to start ben wilson was pronounced dead at the age of just 17. even president ronald reagan called the family to offer h

is dead. >> involved in extraordinary young man. >> he was gunned down. >> it's not how long you live. but how well you live. >> then i seen my brother in that casket. oh, tried to wake him up like man, you ain't dead. get up, man. get up. get up. you ain't dead. get up. then seeing those two guys who did it. >> did you know ben wilson? did you know him? >> reporter: after the shooting cousins billy moore and omar dixon were taken into custody

charged with murder and attempted robbery. moore was later sentenced to 40 years for pulling the trigger and dixon 30 years as his accomplice. on the day that benji died his simeon teammates decided to play their first game of the season without no. 25. earlier in the day students sobbed at simeon simply overwhelmed with grief, but benji's mother stood tall in the gymnasium. >> so today i speak in love of all of you who keep benji's memory and dignity and be strength v and strength and love alive -- strength and love alive. >> reporter: the wake was held on the gymnasium floor and

8,000 people came to see benji lying in his no. 25 jersey. the line stretched blocks outside of the school, mourners waited seven hours. >> i still have dreams about him like, you know, he came back and he was able to play again, but just dreams. >> sometimes i sit down and, you know, when i'm going through things, you know, i speak, you know, just like i would to my grandparents, you know. hey, benji, how you doing, that type of thing. i just can't forget about him.

this is very emotional. >> reporter: still an emotional story 25 years later. there are some updates to this story. at the time of his murder benji wilson left behind a 10-week- old son named brandon. well, brandon would go on to become a talented high school prep basketball player himself. even played some college basketball at the university of maryland eastern shore but he would leave after his sophomore season according to a school official and as for the two young men convicted of this horrific crime, william moore is still in federal prison for wilson's murder and omar dixon would tack on additional charms when he was arrested for aggravate -- charges when he was arrested for aggravated unlawful use of a weapon in a separate attempted murder case. let's move on. next summer south africa will

play host to the 2010fifa world cup but it was back in 1995 when they hosted another world cup that changed the country, a game of rugby that united 42 million south africans. now clint eastwood's new movie in vic us brings this amazing true -- invictus brings this amazing true story to life and sat down with matt damon is yuntr rep on ma ond sporth r tochan wor >> l s ouiny. rep onat inciple that the movie invictus was born. obviously you're a big sports fan yourself. what did sports do you think has the ability to unite people like the way we saw in this

movie? >> weah, spare iqued ted o ite and ela was actually quoted as saying that. i guess there's something about getting, you know, 60,000 people in a space together g fotly sa thople ss tcoun caion peooss the . s cawas thiste >> b me paect faces the daunting task of a vide h afogetin the wake of apartheid. what struck you about this story that made you so interested in wanting to do it?

>> that it was true. i couldn't believe it when i read it and i called clint and i said i can't believe this stor ther fog. as hand th wad thint make no e. leas pre, it kes teso me repomandout th of e taint rugby team. francois is a pretty big guy. how did you get ady ay >>gr world obly t th beey

so >> sou i am i am gs d, spiroem. epor lm'stitle us rto aem t mandela used as a sou inspn anngthg near i because the country didn't fall into civil waby l e tionhould have and it's a decision that every single person in that country made. still to come he's a big and bad offensive lineman in the nfl but what are his keys to success off the field?

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take a look at san francisco 49er eric heitmann and you'd never know that off the field he's a pianoman. here's comcast sportsnet's bay area's brody brazil to show us. >> reporter: this is the side of eric heitmann people know, an offensive lineman for the 49ers since 2002. and this is the side most would never expect, at 6' 3 315 pounds he's got the frame of a football behemoth with the hands of a beethoven. >> my mom made me take lessons

about 10, 11 years growing up as a kid. right around when i started playing football, football became more of a focus for me and piano you put on the back burner a little bit. it was always secondary for me, always a hobby but something that i always kept up. >> reporter: inside his home today heitmann employs both a piano and keyboard setup inner it connected with the apple program garage band. it is here where the stanford graduate composes his best work in the form of cinematic sound scapes. >> my style is more of a movie classical theme sounding stuff i guess i would characterize it. >> so dramatic it plays well essentially. it's dynamic. >> yeah. i'd like to think that. you guys can be the judge. >> reporter: while football is the profession and composition is the passion, it's the music that gives eric an escape from life when he needs it. >> i'll be home sunday night or after a big game and maybe there's something you need to crank out on the piano to kind

of relieve some emotions or something. i use it as an escape. it's a good way to kind of release frustration or whatever emotions you're feeling at the time. it's something i've done for so long, you know, i've played for so long i don't ever really want to let it go at this point. i enjoy playing and i'm going to keep doing it as long as i can. >> reporter: it's only natural to expect eric's musical endeavors will outlast his football career, but that doesn't necessarily mean he's planning for a future behind the keyboard. >> you never know. we'll see at some point maybe if there's something you can put out there. i'd love to get in a recording studio at some point, maybe not for profit, just something i could show my kids at some point. i'll continue to do this for as long as i can. >> reporter: brody brazil, comcast sportsnet. >> he's pretty good. his team's not doing bad either. that's going to do it for this edition of net impact.

i'm your host and for all of us thanks for watching, see you again next month. f elcoe, m

zeller. >> tonight, north carolina finds themselves in need of a must win. perennial powers in the acc going through one of its worse stretches under the head coach. they have lost five of their last six games and come to georgia tech needing a win for both standings and morale. but the yellow jackets will be formidable form. north carolina, needing a win. georgia tech protecting the home court. who is hungriest. we find out right now in a great acc match up.

>> welcome inside alexander memorial coliseum as the tar heels pay a visit to the georgia tech yellow jackets in an acc women's hoops matchup from atlanta. >> hello, everybody. along with debbie, i'm jen. the georgia tech yellow jackets find themselves in an unfamiliar place. coming out without the usual amount of swagger we are used to seeing. >> i think part of the reason why georgia tech is ranked and north carolina is not. usually you don't see that in this match up. north carolina, you're right about the swagger. lacking some confidence when you look at what they did in the early part of the season they were winning, playing north carolina like basketball.

but in the month of february they have taken a big slide. although their numbers are down they still have plenty of talent and they have plenty of time to put it back together and in order to do that it emily lewkis has to continue to be the big time scorer she is capable of being. all about guard play for the tar heels. always been that as long as they rebound can play the pace they want. >> georgia tech, a player playing sensational. it is senior night here at georgia

f omedtrok >> we are getting set for acc women's hoops in atlanta. me now to take a look at our food lion startling lineups. tar heels using 12 different starting lineups this year. couple of staples in the back court. the freshman getting her first straight start. pair of sophomores on the inside. georgia tech yellow jackets it is senior night remember. first career start. taylor. montgomery. foster. rounding out the lineup for the jackets. >> going to get to take the

jump for the jackets in her first start. snoop seniors on senior night. has got to guard lucas. >> lovely turn off lucas. >> georgia tech has been very good at home. although they have dropped their last contests on their own floor. >> rebound there for blackman but she gets called for the travel. >> good weak side board by tiffany blackman. both teams starting out in man- to-man defense. georgia tech off a dead ball in bound will extend their pressure and see a lot of

different looks out of joseph's team. >> checking in for blackman. regular starter for the jackets. gets tied up but finds lucas. nice pass. good job by montgomery. had it batted away. but then lost. for north carolina it has been a different season. has had to have a lot of patience with this young team as they lost six of their last seven. they lead the league in scoring but have had some trouble hanging on to the basketball. winning 14 of the last 15 in this series they haven't won. >> right to the basket.

>> nice take by alex. in transition. you go all the way to the rim. known for dribbling through pressure not passing over it. >> alex montgomery doing a nice job handling against the north carolina man-to-man and no one stops her so she takes it all the way. i think alex has been struggling with her offensive game including the three. >> she will have a better opportunity. >> has that basket for north carolina. >> and has been a misery to me. capable of putting up a double, double every night for north carolina only averaging eight points a game. >> a steal by broomfield sends the tar heels running. >> to reed. nice little hesitation move. gets the basket. >> this is north carolina's tempo. when they can play off the bounce. they are not a team that plays off the pass very often. keep them in front. can't let them get to the

middle. floor. >> another turnover by georgia tech. lucas takes the ball down the floor for the tar heels. gets that shot to fall. you'll notice she is not wearing a brace on her right shoulder. has worn a harness. this is the first game she has been able to have her shooting arm free this year in 2010. >> good time-out by michele joseph to settle her team down. they have got to stop the ball. north carolina is dribbling right through the middle of their pressure. >> north carolina won the first meeting between these two teams earlier this year. 89-78. the most points given up by the jackets all season long and they turned them over and got points out of it. >> north carolina's turnover margin is only about plus 3. that's low for them. usually a team that turns them

over a little more. averaging 20 turnovers. only turning teams over 23 times. now north carolina showing zone. >> at the point now for georgia tech. montgomery in the corner. she gets that three ball to fall. >> big basket for alex. needs to see a big basket tonight. really struggling outside the arc playing at home. >> looks like a 3-second count but on the other end of the floor montgomery lighting it up early. >> what north carolina is doing is showing zone and switching to man. michele joseph very prepared for that today. so montgomery. having to guard her all the way to the corner. good execution by georgia tech. >> looking for the back door

pass and gets it. >> this could be a big night for alex. desperately needs one. it would be tremendous for them to gain some momentum going towards march. >> time-out north carolina. sylvia not happy with this little run georgia tech has gone on to pull it within one. >> michele joseph is wearing a microphone for us tonight. let's hear what she had to say. >> there is the play she is talking about. saw the back door opportunity. had a chance to watch with coach joseph today and her team was definitely looking for back door opportunities against north carolina. >> pretty good year for georgia tech. four straight 20-win season under coach joseph.

7-5 in the acc. debbie, they are looking at trying it hold on to one of those top 4 spots in the conference heading into the tournament. something they never had before. >> that's basically what they are looking to do here. they do have to go play at nc state. north carolina fell below 500 in conference play with a loss to wake forest last night. >> four on the shot clock. has to force it up. montgomery pulls down another board. >> if you can contain dribble penetration keep north carolina in front. they don't play off the pass. forced to take a tough shot. >> passes. back out to montgomery. left open. >> nice outlet. >> decides to take it herself.

>> montgomery will pull this one back out to find foster. >> posting up strong. that was the wrong island to try to throw it to her. >> alex montgomery has all of georgia tech's points so far in this game as they trail north carolina by one. f ♪ who ♪ ♪ ♪ one, y' ne ty'al♪

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thanks solely to alex montgomery who has all of her team's points. >> three for five from the floor. great start. taking it strong to the basket. >> alex montgomery has one three and a couple of twos. taking on florida state and duke, a combined 3-23 from the floor. 3 for 15 outside of the arc in the last two games here. so tonight she is already having a better game offensively than she did the last two times that she suited up in white. >> taking her first shot. drawing a foul. >> it is a terrific combination of inside/outside play for machelle joseph when alex montgomeryly is knocking down the three and playing with versatility in her exhanded offensive game. just a matter of time before

she gets going. >> leading the acc from the free-throw line shooting 82% for the year. >> tremendous leader. focus and attention of all of her teammates. when she speaks they listen. i think half of them are scared of her. i'm kind of afraid of her. >> ardosi forcing the turnover by the tar heels. walthour in for the jackets running the point now. foul off the ball called against georgia tech. >> north carolina goes looking to play off the pass a little bit against pressure.

lewkis knows better. turnover. >> that's the patience that you were talking about that sylvia was trying to deal with. lewkis should know better as a veteran player on the floor. coming across mid-court and picking it up. >> montgomery trying to add to her total. shot is short. keeps hustling through the ball there on the baseline. >> alex- trying to make a play. remember that right leg is not 100%. the acl injury she suffered in the acc tournament together and she tried to bounce it off warren. sierra warren. >> slow recovery crosses for alex at the beginning of this year. >> recently played her first full 40 minutes against florida state last week.

>> in the game for north carolina handing it off. mo bennett now. >> walthour. guarding her. >> trying to keep her on the same side of the floor. >> 10 on the shot clock. nice ball fake. >> another trip to the free- throw line. >> because she has added that game, the scout on ardosi has changed completely. you've got to guard her to 17 feet. she has got the ability with that pump fake to put it on the floor and go by you. >> called on the floor. not a shooting foul. so turns it over with the travel from foster. >> sixth turnover for the

yellow jackets. ever since machelle joseph called that time-out and got her team to settle in. it was 8-2 when that time-out was called. >> quick. walthour finds ardosi and she gets the basket. her first field goal. four points. >> she is just tough. she is going to run the floor every time. and she runs right to the front of the rim. >> and a steal taken away by mo bennett. she will stop it. quickly noticing her presence in the game for north carolina. 6'6" freshman getting that rebound. >> tremendous shot blocker on the defensive end. ardosi has got it on her.

nice job to split the trap. >> that basket snapped a 9-0 run by the yellow jackets. >> tapped away. eventually does go off a georgia tech player. >> watch that everybody is on this side of the floor right here. georgia tech. that's an overload offensively. then you come through here. the pass that walthour is going to try to throw is too long and flat. >> got tied up in the middle of the court. trying to take advantage of it.

walthour with the follow. >> georgia tech's defense generating extra possessions. and they have had numbers on the break off their defense. i'd say they are 50% right now in converting off their defense in terms of having numbers. the last time they didn't score this time they are going to the line. >> i think georgia tech would like that number to be maybe 3 out of 4. >> robertson warren picking up the foul for the tar heels on that last play. alex montgomery checks back into the game after a brief rest. >> north carolina with their small three guard lineup on the floor. see if they can get a few touches with her back to the basket. >> using their bigs to relieve

pressure. >> lucas. back out to shayla white. adams picking up the rebound. >> great rotation defensively by georgia tech to get matched back up with the proper people. you've got to communicate to be able to do that. >> foul against the yellow jackets but georgia tech continues to lead it. 13-10 over north carolina in the first half.

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>> georgia tech and north carolina just a three-point ballgame in the first half. yellow jackets ranked number 22 this week. trying to hang on to one of those top four spots sitting in fourth place in the acc right now. >> machelle joseph trying to fire up her troops and give them some energy during that last time-out yet never seems to be at a lack or loss of energy, does she, debbie? >> no, she doesn't. she needs to bring more, though. broomfield has a shot for north carolina. they are going to call that one

off. fouled before the shot. goodlett picks it up for georgia tech. her first. >> right now georgia tech an 11- 2 run since machelle joseph called that time-out. >> getting a little physical out there. another foul will be called before the ball can even be put in play. this one on foster. >> the foul called on foster. cut fast to the basketball. >> good pressure by the jackets. really having a hard time finding anyone to get the ball too. >> she is 5'5". montgomery trying to take angles away. >> two fouls down here on this end for georgia tech. >> that's the second one on

foster there. >> watch alex- montgomery. >> hanleing the basketball with her hands. doing a great job on the out-of- bounds play. >> that one they got in. but swatted out by mo bennett. >> big defensive play because mo bennett just bailed alex montgomery out. you're not supposed to give up that pass. >> ardosi gets it back to bennett. hands it back to the senior. >> calling for it on the inside and she gets it. machelle joseph really challenging her. talking about alex montgomery shadowing the basketball doing a good job. watch her body position right here with her feet, okay. she needs to make sure she takes away anything in here

defensively. watch how italy lewkis gets open. now mo bennett bails her out. you can see where alex's body position slips closer to the sidelines. >> some frustration from goodlett picking up an offensive foul. her second of the game. >> second personal foul of the game. first on the offensive end sending her back to the bench to get a conversation with her head coach. >> having some trouble holding on to the basketball. so far this one, a lot has to do with the footing. lewkis with the miss. the rebound. blocked by montgomery. lewkis stayed with it. >> north carolina takes a lot

of tough cues. >> grab and read going for the steal. can't quite track it down for georgia tech but the pressure stays on. >> thought about going for it. didn't take the gamble. broomfield does not get it to get it toking for the tar heels. but there is a foul. >> not a robbery until somebody starts to beat the other and right now georgia tech has only won one time in the last 15 meetings between these two teams. so there is a lot for georgia tech and machelle joseph to play for. besides being higher ranked and already being in the ncaa tournament they want to be one of those top four seeds in the acc tournament. something this program has never done before. >> we will take a look at the upcoming acc tournament at halftime. >> it is interesting if play

ended today. one more round of games left in the regular season this weekend. >> got a great ballgame coming up after this one. be sure you stay with us. top 25 acc women's hoops matchups there. >> three of the best players in the league are playing tonight. next game, monica wright for virginia. thomas for duke. that's worth getting an extra bag of popcorn and hanging out by the t.v. >> right on cue. getting the hoop for the jackets. she has six. >> georgia tech is in the stands there active on the defensive end and they are really trying to pressure north carolina to keep this where they want. forcing turnovers. forcing tough twos. >> montgomerwn